African development requires private sector participation

Both the ADB and the DBSA expressed their desire to engage the private sector in the various development initiatives throughout Africa and stressed their commitment to this cause.

The workshop, held at Deloitte on 26 February 2008, was organised by the NEPAD Business Foundation (NBF), which promotes dialogue between the public and private sectors concerning the delivery and implementation of NEPAD goals. Introducing the NBF to workshop participants, CEO Lynette Chen described it as a platform for business to understand the principles of NEPAD and to engage in its initiatives.

Chen explained that the NEPAD Secretariat had identified infrastructure development as the most critical need in bridging the gap between Africa and the developed world. Without adequate transport, energy, telecommunications and water networks, all other development initiatives are severely hampered.

We're more fortunate

Mwafoyonjo Lyson Muwila, Principal Program Manager at the DBSA outlined social, political, financial and cultural constraints that confront both public and private sectors in tackling development projects. "In many respects," he pointed out, "South Africa is in a considerably more fortunate position in terms of skills, resources, innovation and expertise. Consequently, it has a critical role to play in unlocking the potential of the continent. Certainly, the risks of operating in Africa are significant, but the rewards are commensurately greater."

Despite the many obstacles that cripple development, numerous African countries are currently experiencing rapid economic growth. Unfortunately, the lack of adequate infrastructure cannot support and sustain this growth. Hence the urgency in enlisting all possible resources and expertise to find solutions.

"It is impossible for governments to find the US$20 billion annually which is required to create the necessary infrastructure," Muwila stressed. "We look to the private sector to implement the many various forms of private public partnerships and other initiatives to build the continent's infrastructure. We can no longer afford to 'think regionally and act nationally - growth depends on entire regions working as a single entity." He pointed to successful regional projects such as the Maputo Development Corridor as examples that point the way towards future development.

"In addition, I can list MOTRACO, the Trans Kalahari Corridor, Kazungula Bridge, the SADC Regional Information Infrastructure project, the Caledon Transboundary Water Project Promotion of Transfrontier Conservation Areas. All these projects in some way embraced Private Public Partnerships". He also described the enormous success enjoyed in Tunisia, where SMMEs were almost exclusively used to promote electrification throughout the country."

Projects need support

Muwila acknowledged that to achieve success, projects had to be supported wholeheartedly by heads of state, driven by champions from both public and private sectors and had to enjoy buy-in from the people on which they impacted. He did not hesitate in recognising the numerous socio-economic and political challenges that prospective developers had to overcome. However, he added that countries themselves were aware of these shortcomings and consequently welcomed the corporate governance reports that assisted them in developing into the future.

Mike Salawou, Task manager for the NEPAD Infrastructure Project Preparation Facility at the ADB considered key financial constraints the private sector had to resolve in engaging in infrastructure development programs. Like Muwila, he did not pull punches but emphasised the need to generate new development paradigms, suggesting recourse to pension schemes to finance projects as an example.

"We need to know from you as the private sector what you consider the major difficulties in participating in financing infrastructure in Africa - how do you perceive the blockages and impediments? Secondly, where do you identify opportunities for participation? Knowing this will help us in our dialogue with governments, influencing policy and building partnerships."

Joint approach needed to solve problems

Participants were quick to raise their concerns, which ranged from pricing mechanisms to political instability, and Muwila responded with a succinct encapsulation of Africa and its challenges.

"We development institutions are as equally frustrated as you in the private sector. That is why we so desperately need you, your skills, your ingenuity, your resources, your abilities if we are going to find solutions to develop our continent. Political instability, financial, culture, and physical constraints - this is the environment in which we find ourselves. Therefore, we need to come up with appropriate risk models. We cannot simply turn away from countries that are emerging from conflict or still plunged in it because they do not have the structures, policies and regulatory frameworks we expect in 'normal' countries.

“Together, we have to find solutions. Help us. Give us your opinions and recommendations. We take this information seriously. It helps us enormously when we engage with governments. We face a monumental task, but I am convinced that if we join hands, we will achieve our goals."

In the furtherance of NEPAD's goals, the NBF has established a Project Management Office led by John Rocha that will play a crucial role in facilitating and enhancing interaction between the private sector and key African development institutions such as the DBSA and ADB. Private sector engagement in NEPAD projects can be directed through the NBF to explore the opportunities across the continent.